While the snail and the family home may have garnered a chuckle, the family home in a divorce is no laughing matter. To some, it is just a house; to others, it is a sign of stability and security.
Family law proceedings can potentially affect relationships at the most fundamental level. Housing is the fundamental basis of stability and security for an individual or family. Whether you represent clients as an attorney, financial planner, or Certified Divorce Lending Professional, what you do can have long-lasting consequences on others.
The Current Mortgage
Let’s look at the mortgage because how the existing mortgage is addressed in the marital settlement agreement can potentially affect both spouses in the future.
- While one spouse may be required to refinance within a certain period, what happens if they can’t?
- How will the language used in the settlement agreement affect the other spouse’s ability to purchase a new home?
- If the marital mortgage is being left in place to keep existing mortgage terms, will the current lender be able to execute the alienation clause in the mortgage note and call the loan due and payable?
- Is there an existing property tax liability on the marital home that is being overlooked, or will the spouse retaining the home be responsible for paying the tax liability?
- Will there be marital debt or attorney fees paid out of the equity in the home? If so, will the access to equity be limited?
- Will the divorce order sever joint tenancy leaving both spouses vulnerable to liens, judgments, and probate?
It’s not as simple as one spouse retaining or selling the house – much more is involved in the overall picture. Family law, financial and tax planning, real property, and mortgage financing absolutely overlap. This overlap affects not only the divorcing couple but can also impact how each member of the professional divorce team effectively does their job, whether it’s the attorney, financial planner, or Certified Divorce Lending Professional.
Additional Situations in Divorce to Consider
Here are examples of other complicated yet everyday situations in divorce to consider that will directly impact the ability to obtain mortgage financing:
- The spouse paying support income has fluctuating income.
- A Property Settlement Note is put in place to distribute ownership in a family business.
- Equalization payments are given rather than spousal support.
- The spouse needing mortgage financing receives a lump sum payment versus monthly spousal support.
- When the marital home is sold, and the net proceeds are divided, there isn’t enough qualified income for mortgage approval.
When your mortgage partner tells you they don’t need specialized training in divorce because they understand the mortgage guidelines, they are saying that they don’t know divorce!
Certified Divorce Lending Professionals know divorce. Certified Divorce Lending Professionals (CDLP®) are licensed mortgage professionals who have completed a comprehensive and rigorous certification program with ongoing continuing education and development in divorce mortgage planning. Their ability to expand their vision of the normal scope of the traditional mortgage professional is a great differentiator from those without training who have limited tunnel vision of client-to-application.
The role of the CDLP® is to support not only help the divorcing client but the other members of the professional divorce team through the 4-phases of divorce mortgage planning. They are creative thinkers who can provide clarity and value in helping divorcing homeowners make more informed decisions regarding their home equity solutions and divorce mortgage planning strategies.
And for all of us involved to provide a higher level of service to divorcing clients, we must acknowledge how the home can impact multiple facets of the divorce itself and life after divorce.
Involving a Certified Divorce Lending Professional (CDLP®) early in the divorce settlement process can help the divorcing homeowners set the stage for successful mortgage financing in the future.
This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations.
Copyright 2023—All Rights Divorce Lending Association
